BofA, Citi Incorrectly Hid Billions in Repo Debt
May 28, 2010
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More in the ongoing Repo scam saga. This title from March by ZeroHedge The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=352908 seems particularly apt.
This is another good one: Repo 105 - Very Funny - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=353970
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BofA, Citi Incorrectly Hid Billions in Repo Debt: Report
Published: Wednesday, 26 May 2010 | 7:04 PM ET
http://www.cnbc.com/id/37366067
Bank of America and Citigroup incorrectly accounted for billions of dollars in debt over the past three years, according to a report from the Wall Street Journal.
The report highlights a form of corporate borrowing increasingly under scrutiny since the financial crisis began. The loans, known as "repos," or short-term repurchase agreements, allow banks to increase the amount of risk they can take in securities trading.
Both BofA and Citigroup disclosed in filings with the Securities and Exchange Commission that they have over the last three years accidentally classified some repos as sales when they should have been classified as borrowings, the newspaper reported. The amounts involved were small for the banks, though they totaled billions.
It is illegal under federal securities rules to intentionally conceal debt and mislead investors. Bank of America and Citigroup claim the accounting flaws were purely accidental and represent minute portions of their overall operations.
Bank of America, in addressing errors that reached up to $10.7 billion per quarter, noted that the flaws ”represented substantially less than 1 percent of our total assets," the Wall Street Journal reports.
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